ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2012

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number 000-52376

PROFIRE ENERGY, INC.

(Name of registrant as specified in its charter)

Nevada

20-0019425

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

321 South 1250 West, Suite 1

Lindon, Utah

84042

(Address of principal executive offices)

(Zip code)

(801) 796-5127

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Exchange Act:

None

Securities registered pursuant to section 12(g) of the Exchange Act:

Common, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨ Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

¨ Yes þ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

þ Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

þ

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated Filer ¨

Accelerated Filer ¨

Non-accelerated Filer ¨ (Do not check if a smaller reporting company)

Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

¨ Yes þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which our common stock was last sold, as of the last business day of the our most recently completed second fiscal quarter was approximately $9,380,477.

As of June 19, 2012, the registrant had 45,000,000 shares of common stock, par value $0.001, issued and outstanding

Unless otherwise indicated by the context, references herein to the “Company”, “Profire”, “we”, our” or “us” means Profire Energy, Inc, a Nevada corporation, and its corporate subsidiaries and predecessors.

Unless otherwise indicated by the context all dollar amounts stated in this annual report on Form 10-K are in U.S. dollars.

Information Concerning Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) that are based on management’s beliefs and assumptions and on information currently available to management. For this purpose any statement contained in this report that is that is not a statement of historical fact may be deemed to be forward-looking, including, but not limited to, statements relating to our future actions, intentions, plans, strategies, objective, results of operations, cash flows and the adequacy of
or need to seek additional capital resources and liquidity. Without limiting the foregoing, words such as “may”, “should”, “expect”, “project”, “plan”, “anticipate”, “believe”, “estimate”, “intend”,
“budget”, “forecast”, “predict”, “potential”, “continue”, “should”, “could”, “will” or comparable terminology or the negative of such terms are intended to identify forward-looking statements. These statements by their nature involve known and unknown risks and uncertainties and other factors that may cause actual results and outcomes
to differ materially depending on a variety of factors, many of which are not within our control. Such factors include, but are not limited to, economic conditions generally and in the industry in which we and our customers participate; competition within our industry; legislative requirements or changes which could render our services less competitive or obsolete; our failure to successfully develop new services and/or products or to anticipate current or prospective customers’ needs; price increases or employee limitations; and delays, reductions, or cancellations of contracts we have previously entered into, sufficiency of working capital, capital resources and liquidity and other factors detailed herein and in our other filings with the United States Securities and Exchange Commission (the “SEC” or “Commission”). Should one or more
of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking statements are based on current industry, financial and economic information, which we have assessed but which by their nature are dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. We hereby qualify all our forward-looking statements by these cautionary statements.

These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Exchange Act) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise.

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The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the Commission.

PART I

Item 1. Business

Overview

We originally incorporated under the name The Flooring Zone, Inc. in the State of Nevada on May 5, 2003 and engaged in the retail floor covering business from that time until the end of 2007. On September 30, 2008 the Flooring Zone, Inc. entered into an Acquisition Agreement with Profire Combustion, Inc., an Alberta, Canada corporation, under which The Flooring Zone, Inc. acquired 100% of the outstanding common shares of Profire Combustion, Inc. in exchange for the issuance of 35,000,000 common shares.

Following closing of the exchange, the three Profire Combustion, Inc. shareholders held 78% of The Flooring Zone, Inc. common stock outstanding after the transaction.

On December 8, 2008 we amended our Articles of Incorporation to change the name of the corporation to Profire Energy, Inc. The name change, and corresponding OTCBB trading symbol change from FZON to PFIE, became effective on January 20, 2009.

Principal Products and Services

We manufacture, install and service oilfield burner management systems and related products. Our products and services aid oil and natural gas producers in the safe and efficient transportation, refinement and production of oil and natural gas.

In the oil and natural gas industry there are numerous demands for heat generation and control. The product in pipelines and storage tanks must be kept sufficiently warm to flow efficiently. Equipment of all kinds, including line-heaters, dehydrators, dewaterers, separators, treaters, amine reboilers, free-water knockout systems, etc. require sources of heat to satisfy their various functions. In addition to the need for combustion products to meet heating demands, there is also a need for skilled combustion technicians. Profire was founded to try to meet some of these needs.

Initially, our primary focus was on providing installation and maintenance services to service the products and systems of other manufacturers. Management soon determined, however, that it would be in our best interest to also establish ourselves as a technology supplier. Management also recognized the need to develop our own proprietary burner management systems to monitor and control combustion. Our principal developmental goal in building our own system was to ensure that the system would meet or exceed the highest safety and quality standards in the industry and that the system would be functional and easily controlled by oilfield
operators.

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With this goal in mind, we developed the Profire 1100 burner management system. This system has become widely popular in Western Canada, with sales to such companies as Exxon-Mobil, Shell, ConocoPhillips, Devon Energy, Petro-Canada, Encana and many others. This system has also been sold and installed in various parts of the world, including the United States, France, Italy, England, the Middle East, Australia, China and Brazil.

During our fourth fiscal quarter 2011, we introduced a new product, the Profire 2100. The 2100 is a more powerful burner management system than the 1100. It complies with CSA and UL ratings and has expandability and remote access and data logging. It has more custom features than the 1100 and allows the end user much more flexibility in multiple field applications.

We believe our Profire 2100 and 1100 burner management systems offer certain advantages to other burner management systems on the market including that they:

•

meet or exceed all relevant codes and standards;

•

easily install with clearly marked component I/O;

•

have easily accessible and removable terminal connections;

•

rapidly shut down on flame-out;

•

use DC voltage spark ignition;

•

accommodate solar panel or TEG applications with a low-power design;

•

enable auto-relight or manual operation; and

•

include transient protected fail-safe circuits.

In addition to the Profire 2100 and 1100 burner management systems, we manufacture other systems and products for sale, including a burner management system specific to incinerator systems and other specialized applications with the use of expanded software cards and “fuel-trains” or “valve-trains” to accompany system installations. These fuel-trains include piping, valves, controls, etc., relating to the process of safely providing fuel to burners, as well as having safety controllers to monitor operations. We are also developing various products that will be introduced to the market over the next few
years. These may range from valve systems to igniters. We recently introduced a patent pending firegate technology that also provides efficiency benefits to our clients. We continually assess market needs and look for opportunities to provide quality solutions to the oil and gas producing companies we serve.

Principal Markets and Distribution Methods

Initially we focused our sales efforts primarily in Western Canada. Given our success in that market, we determined to expand our sales efforts to other markets, particularly the U.S. market. Pursuant to our development strategy, we have purchased office and warehouse space in Lindon, Utah and we opened an office in Houston, Texas to serve our current and potential clients in that region. At present, we believe the best ways to penetrate new markets is to retain well-established supply companies to represent Profire products and market them to their existing customers and to establish regional offices to support such
activity We hope to take advantage of those existing relationships to rapidly establish market share in new markets. We are currently contacting product supply houses in various new markets to represent our products. We have four in-house sales personnel in the U.S. market who are primarily responsible for creating and establishing these relationships. In Canada, we have a well established reputation and we continue to utilize these relationships to sell our products directly to end users through our dedicated three-person sales staff. Relationships also currently exist with three major non-exclusive authorized distributors in the U.S. and Brazil who continue to create awareness of our products and services.

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Competition

Based on our experience, we believe most of the other companies in our industry are either small-sized service companies or product retailers who sell products but have no service department to support their products. In the U.S. market we are beginning to see several companies that are marketing related and somewhat similar products. They include SureFire, Platinum and ACL. These competitors are limited regionally and tend to focus on areas close to their headquarters. While we believe the price is a significant method of competition within our industry, we believe the most important competitive factors are performance and
quality. Profire has, and intends to continue to provide top quality high performance products.

We recognize that the oilfield services industry is highly competitive. As this industry grows and matures we expect additional companies will seek to enter this market. Many of these companies may be more highly capitalized, more experienced, more recognized or better situated to take advantage of market opportunities.

Sources and Availability of Raw Materials

We have contracted with a third-party manufacturer, to manufacture our burner management systems, specifically the Profire 2100, 1100 and the Profire 1100i. This has helped to improve manufacturing efficiencies. Under the direction of our product engineers, the manufacturer is able to procure all electronic parts, specialty cases and components, and from those, assemble the complete system. Using specialty equipment and processes provided by us, the system is tested on-site by the manufacturer and if the finished product is acceptable, it is shipped to us for distribution. Orders to the manufacturer are typically for 500 to
1,000 systems. The shipments are usually limited to 250 systems, so that in the event any one shipment is lost or damaged, inventory levels are not seriously impacted. The entire process is typically completed within sixty days of issuing the purchase order.

While we have a contract in place with this manufacturer, should we lose its services, for whatever reason, we believe we have adequate alternative manufacturing sources available. We do not have contracts in place with the parties from whom we acquire parts and products. We believe, however, there are adequate alternative sources for parts and products available to us should they be needed. In the past, we have not experienced any sudden and dramatic increases in the prices of the major components for our systems. Because the component parts we use are all low priced (none are currently higher than $40), we do not anticipate that a sudden or dramatic increase in the price
of any particular component part would have a material adverse effect on our results of operations or financial condition even if we were unable to increase our sale prices proportionate to any such component price increases.

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Dependence upon Major Customers

During the fiscal years ended March 31, 2012, 2011 and 2010, the following customers accounted for more than 10% of our total revenues:

Year ended March 31,

Customer

2012

2011

2010

Grit Industries/A-Fire Holdings Ltd.

16%

19%

26%

Heating Solutions International Inc.

22%

15%

19%

Guest Controls

12%

14%

23%

Often our customers, as is the case with Grit Industries Inc./A-Fire Holdings Ltd. and Heating Solutions International Inc., are contractors for large oil companies who specify the use of our equipment. Typically, our customers bid for the same jobs, so if one does not get the job, another will. Regardless, of who wins the contract, if the oil company bidding out the job requires our equipment the winning bidder has to acquire the equipment from us. Of course, the loss of any one or more of these major customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Patents, Trademarks and Other Intellectual Property

While we believe that the success of our business depends more on the technical competence, creativity and marketing abilities of our employees than on any individual patent, trademark, or copyright, as part of our ongoing research, development and manufacturing activities, we may, if we believe it will provide us a strategic or economic advantage, seek patents or other appropriate intellectual property rights and protections. We recently applied for patent protection on our new firegate technology and we anticipate pursuing appropriate intellectual property protection as we recognize additional technological innovations.

Need for Governmental Approval of our Principal Products or Services

We are required to obtain certain safety certification/rating for our combustion management systems before they are released to the market. We have received the appropriate CSA and UL certifications for our burner management systems.

Effects of Existing or Probable Governmental Regulation on our Business

As government and industry continue to heighten safety standards, demand for combustion safety controllers and management systems, such as those we produce, continues to grow. The arena of mixing fire and gas is an area of obvious focus for safety regulators. Governing bodies have historically been reticent to establish standards that were too demanding, as safety products and policing capabilities were not readily available. More recently, however, regulators in the United States have begun enacting more stringent compliance and efficiency requirements. We have always focused on providing products and services that exceed
existing safety standards, therefore, we believe demand for our products will increase as regulators continue to tighten safety and efficiency standards in the industry.

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In addition to satisfying regulatory and safety requirements, we believe oil and gas companies are beginning to recognize the significant increases in efficiency, safety and emission control gains that can be realized through the use of our burner management systems and products.

Research and Development

We place strong emphasis on product-oriented research and development relating to the development of new or improved products and systems. During the years ended March 31, 2012 and March 31, 2011 we spent $164,400 and $107,900, respectively, on research and development programs. None of these research and development costs were borne by our customers pursuant to customer-sponsored research activities relating to the development of new products, services or techniques or the improvement of existing products, services or techniques.

Cost and Effects of Compliance with Federal, State and Local Environmental Laws

Our business is affected by local, provincial, state, federal and foreign laws and other regulations relating to the gas and electric safety standards and codes presently extant in the oil and gas industry, as well as laws and regulations relating to worker safety and potentially environmental protection. We cannot predict the level of enforcement of existing laws and regulations or how such laws and regulations may be interpreted by enforcement agencies or court rulings, whether additional laws and regulations will be adopted, or the effect such changes may have on us, our business or financial condition.

Additionally, our customers are affected by laws and regulations relating to the exploration for and production of natural resources such as oil and natural gas. These regulations are subject to change and new regulations may curtail or eliminate customer activities in certain areas where we currently operate. We cannot determine the extent to which new legislation may impact customer activity levels, and ultimately, the demand for our products and services.

Employees

As of June 19, 2012, we had 33 employees, all of which are full-time employees. We have 20 employees working out of our Edmonton, Alberta Canada office, 11 working out of our Lindon, Utah, U.S. office and two working in our Houston, Texas, U.S. office.

Reports to Security Holders

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other items with the Commission. The public may read and copy any materials we file with the Commission at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549 on official business days during the hours of 10:00 am to 3:00 pm. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Alternatively, you may access these reports, proxy statements and information statements and other information regarding issuers that file electronically with the
Commission at its internet website www.sec.gov. We provide free access to our filings with the Commission, as soon as reasonably practicable after filing, on our Internet web site located at www.profireenergy.com. Information appearing on our website is not part of any report that we file with the Commission.

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Item 1A. Risk Factors

In addition to the risks discussed under the heading “Business” we are subject to the following risks.

Risks Relating to our Business

Our business and financial condition could be materially impacted if we lose the services of certain employees. During the fiscal year we brought in additional employees and are working to cross train employees to lessen our dependence on any particular individual. We believe this has decreased our dependence on any one individual. We currently maintain key-man insurance on our CFO, Mr. Limpert but not on our other executive officers or employees. The policy on Mr. Limpert is a term policy with a two million dollar benefit to the
Company. Although it would not solve the potential problem of a loss of the services of any particular employee, we may seek key-man insurance on the other key individuals, and perhaps others, to help in the case of such an event. The loss of the services of any of the executive officers identified in this report could have a materially detrimental impact on the Company.

If we are unable to attract and retain skilled employees that could impair our growth potential and profitability. Our ability to remain productive and profitable depends substantially on our ability to attract and retain skilled employees. Our ability to expand our operations is in part impacted by our ability to increase our labor force. The demand for skilled oilfield employees is high and the supply is very limited. A significant increase in the wages paid by competing employers could result in a reduction in our skilled labor force,
increases in the wage rates paid by us, or both. If either of these events were to occur, our capacity and profitability could be diminished, and our growth potential could be impaired.

The concentration of our customers in one region may impact our overall exposure to credit risk. While we are beginning to realize success in our efforts to expand to new markets, the significant majority of our current customers are located in Western Canada. This concentration of customers in one industry and one region may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform ongoing credit evaluations of our customers and do
not generally require collateral in support of our trade receivables.

Our business has potential liability for litigation, personal injury and property damage claims assessments. Our operations involve exposure to inherent risks, including explosions and fires. If any of these events were to occur, it could result in liability for personal injury and property damage, pollution or other environmental hazards or loss of production. Litigation may arise from a catastrophic occurrence at a location where our equipment and services are used. This litigation could result in large claims for damages. The frequency and
severity of such incidents could affect our operating costs, insurability and relationships with customers, employees and regulators. These occurrences could have a material adverse effect on the Company. We maintain what we believe is prudent insurance protection. We cannot assure you that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims and assessments that may arise.

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Some of our products use equipment and materials that are available from a limited number of suppliers. We purchase equipment provided by a limited number of manufacturers who specialize in combustion burner equipment. During periods of high demand these manufacturers may not be able to meet our requests for timely delivery, resulting in delayed deliveries of equipment and higher prices for equipment. There are a limited number of suppliers for certain materials used in burner management systems, our largest product line. While these
materials are generally available, supply disruptions can occur due to factors beyond our control. Such disruptions, delayed deliveries, and higher prices could limit our ability to provide services or increase the costs of providing services thus reducing revenues and profits.

If we are unable to expand into new markets our ability to grow our business and profitability as planned could be materially adversely effected. We intend to continue to pursue our aggressive growth strategy for the foreseeable future. Future operating results will depend largely upon our ability to expand to new markets and increase sales. To support this growth, we have and will continue to expand our marketing expenditures, add new employees and open additional offices, as needed. There can also be no assurance that we will be able to
expand our market share in our existing markets or successfully enter new or contiguous markets. Nor can there be any assurance that such expansion will not adversely affect our profitability and results of operations. If we are unable to manage our growth effectively, our business, results of operations and financial condition could be materially adversely affected.

If we are unable to manage growth effectively our business, results of operations and financial condition could be materially adversely affected. Our ability to successfully expand to new markets is dependent on a number of factors including:

•

our ability to market our products and services to new customers;

•

our ability to hire, train and assimilate new employees;

•

the adequacy of our financial resources; and

•

our ability to correctly identify and exploit new geographical markets and to successfully compete in those markets.

There can be no assurance that we will be able to achieve our planned expansion, that our products will gain access to new markets or be accepted in new marketplaces, or that we will achieve planned operating results or results comparable to those we experience in existing markets in the new markets we enter.

Changes in the level of capital spending by our customers could negatively impact our business and financial condition. Our principal customers are oil and natural gas exploration and production companies. Our results of operations are dependent on the level of capital spending by our customers. The energy industry’s level of capital spending is substantially related to the prevailing commodity price of natural gas and crude oil. Low commodity prices have the potential to reduce the amount of crude oil and natural gas that our customers can produce economically. While our products
actually enhance the efficiency of their wells, we believe a prolonged downturn in market price will lead to reductions in the capital spending budgets of our clients and reductions in the demand for our products and services.

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Risks Relating to our Stock

Liquidity of common stock. Our common stock has limited trading volume on the Over-the-Counter Bulletin Board and is not listed on a national exchange. Moreover, a significant percentage of the outstanding common stock is “restricted” and therefore subject to the resale restrictions set forth in Rule 144 of the rules and regulations promulgated by the Commission under the Securities Act. These factors could adversely affect the liquidity, trading volume, price and transferability of our common stock.

Our management has a substantial ownership interest in our common stock and the availability of our common stock to the investing public may be limited. Our management owns approximately 79% of our outstanding common stock. The availability of our common stock to the investing public may be limited to those shares not held by our executive officers, directors and their affiliates, which could negatively impact our trading prices and affect the ability of our minority stockholders to sell their shares. Future sales by executive officers, directors and
their affiliates of all or a portion of their shares could also negatively affect the trading price of our common stock.

You may face significant restrictions on the resale of our common stock due to federal regulations of penny stocks. If at any time we have net tangible assets of $5.0 million or less and our common stock has a market price per share of less than $5.00, transactions in our common stock may be subject to the “penny stock” rules promulgated under the Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

•

make a special written suitability determination for the purchaser;

•

receive the purchaser’s written agreement to a transaction prior to sale;

•

provide the purchaser with risk disclosure documents that identify certain risks associated with investing in “penny stocks” and that describe the market for the “penny stocks,” as well as a purchaser’s legal remedies: and

•

obtain a signed and dated acknowledgement from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

If our common stock is subject to these rules, broker-dealers may find it difficult to effect customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

Item 1B. Unresolved Staff Comments

As a smaller reporting company, as defined in Rule 12b-2 promulgated under of the Securities Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide this the information requested by this Item.

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Item 2. Properties

Our principal operational offices are located at Bay 12, 55 Alberta Avenue, Spruce Grove, Alberta, Canada where we own approximately 16,000 square feet of office and warehouse space. We anticipate this facility will be suitable and adequate for our needs for the next twelve months. If the need arose, however, we believe we could secure additional space on acceptable terms.

We also own approximately 9,500 square feet of executive office and warehouse space located at 321 South 1250 West, Suite 1, Lindon, Utah. We anticipate this facility will be suitable and adequate for our needs for the next twelve to twenty four months. If the need arose, however, we believe we could secure additional space on acceptable terms.

We lease approximately 1,250 square feet of office space located at 10900 Brittmore Park Drive, Suite C, Houston, Texas. The term of the lease on this space is through January 31, 2014. Our monthly rent is $1,463. We anticipate this space will be suitable and adequate for our needs through the term of the lease.

Item 3. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm our business. As of the date of this annual report on Form 10-K management is not aware of any material pending legal, judicial or administrative proceedings to which the Company or any of its subsidiaries is a party or of which any properties of the Company or its subsidiaries is the subject.

Our common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “PFIE.OB.”

The following table presents the high and low bid quotations for the fiscal years ended March 31, 2012 and March 31, 2011The published high and low bid quotations were furnished to us by OTC Markets Group, Inc. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. In addition, these quotations do not represent actual transactions.

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BID PRICES

HIGH

LOW

Fiscal year ended March 31, 2012

Fourth Quarter

$ 1.75

$ 0.67

Third Quarter

0.95

0.30

Second Quarter

0.80

0.28

First Quarter

$ 1.11

$0.275

Fiscal year ended March 31, 2011

Fourth Quarter

$ 0.46

$ 0.22

Third Quarter

0.25

0.10

Second Quarter

0.30

0.15

First Quarter

$ 0.35

$ 0.29

Holders

As of June 19, 2012, we had approximately 103 shareholders of record holding our 45,000,000 shares of outstanding common stock.The number of record shareholders was determined from the records of our stock transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, registered clearing houses or agencies, banks or other fiduciaries.

Dividends

We have not declared a cash dividend on any class of common equity in the last two fiscal years. There are no restrictions on our ability to pay cash dividends, other than any state law that may be applicable. Under Nevada law, dividends may be paid to the extent that a corporation’s assets exceed it liabilities and it is able to pay its debts as they become due in the usual course of business. Our board of directors does not anticipate paying any dividends in the foreseeable future; it intends to retain the earnings that could be distributed, if any, for operations.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this report.

Performance Graph

As a smaller reporting company, as defined in Rule 12b-2 promulgated under of the Securities Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide this the information requested by this Item.

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Recent Sales of Unregistered Securities

During the quarter ended March 31, 2012 we did not sell any securities.

Issuer Purchases of Equity Securities

During the quarter ended March 31, 2012 neither we, nor any affiliated purchasers, purchased any of our equity securities.

Item 6. Selected Financial Data

As a smaller reporting company, as defined in Rule 12b-2 promulgated under of the Securities Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide this the information requested by this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

For a complete understanding, this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements contained in this annual report on Form 10-K.

Some of the statements set forth in this section are forward-looking statements relating to our future results of operations. Our actual results may vary from the results anticipated by these statements. Please see “Information Concerning Forward-Looking Statements” on page 4.

Results of Operations

Comparison of the years ended March 31, 2012 and 2011.

Total Revenues

Our total revenues during the year ended March 31, 2012 increased 98% to $15,925,213 from $8,033,926 during the year ended March 31, 2011. Increasing oil prices and general increased operational activity during fiscal 2012 and the stabilizing worldwide economy helped increase revenues significantly during that period. The strong rebound in oil prices resulted in improved sales and increased production activity in oil and gas and continued through our entire fiscal year. We have worked to expand our operations by adding facilities in the United States. We expect to realize significant U.S. based revenues during the coming year and have started to
see revenues in the US increase significantly. During fiscal 2012, sales of goods increased 107% and the service revenue increased 24%. During the year ended March 31, 2012, product sales accounted for 93% of total revenues and service sales accounted for 7% of total revenue. During the year ended March 31, 2011 product sales accounted for 89% of total revenues and service sales accounting for 11% of total revenue. As we continue to focus on the development of new products and expand sales of our existing products, we anticipate product sales will continue to account for the significant majority of our revenue.

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During the fiscal year ended March 31, 2012 95% of total revenues were generated from products and services sold in Canada. The remaining 5% of total revenue was generated from sales in the United States. By comparison, during the fiscal year ended March 31, 2011, 100% of our total revenues were generated from Canadian sales. As we continue our efforts to expand into U.S. markets, we anticipate the percentage of revenues from sales in the United States will continue to increase as a percentage of total revenues.

Cost of Goods Sold

Cost of goods sold during the year ended March 31, 2012 was $6,170,073 for product sales and $717,796 for services for a total cost of goods sold of $6,887,869 compared to $2,812,323 for product sales and $529,821 for services for a total cost of goods sold of $3,342,144 during the fiscal year ended March 31, 2011. While total revenue increased 98%, cost of goods sold increased by 106%. Our gross profit for 2012 was 57% of total revenues compared to 58% during fiscal 2011. Margins decreased slightly as cost of goods sold increased due to higher material costs during the reporting period. We anticipate that as product sales increase in the coming
year cost of goods sold will also increase proportionately. However, with anticipated volume discounts and improved efficiency that we believe should be realized in the future, we expect cost of goods sold, as a percentage of total revenues, will not be significantly higher in fiscal 2013.

General and Administrative Expenses

General and administrative expenses for the fiscal year ended March 31, 2012 were $2,752,451, a 110% increase compared to the fiscal year ended March 31, 2011. General and administrative expenses were 17% of total revenues in fiscal 2012 compared to 16% of total revenues in fiscal 2011. The increase can be attributed to the general increase in operational activity and the expansion into the U.S. market. We have made significant investment in our staff and its growth to expand markets as well as develop products. Along with this growth is a sharpened focus on training clients and suppliers on combustion control and management. We have
retained additional support staff to manage this growth such as sales management, IT, operational management, quality control and shipping staff. In addition to this, we also realized increases in several major components of general and administrative expenses including royalties of $768,647, professional fees of $584,660, stock option expense of $80,530 and bad debt expense of $89,876 during fiscal 2012. By comparison, during fiscal 2011 we realized royalties of $396,250, professional fees of $337,400, stock option expense of $45,262 and bad debt expense of $7,377. Royalties are paid as a percentage of sales and increase proportionate to sales. Professional fees include legal and accounting costs related to our public filings and investor relations fees. The increase in professional fees was primarily due to additional investor relations fees
of approximately $137,000 paid in 2012. Legal and accounting costs incurred during fiscal 2012 related to our public filings remained fairly constant. Stock options granted in 2011 are amortized over the expected term of five years. Accordingly we anticipate a similar expense in 2013. Our bad debt expense increased as a factor of our increased sales and not due to any unusual credit risks. As we continue to expand, we anticipate general and administrative expenses will also continue to grow in proportion.

16

Payroll Expense

Payroll expense during the fiscal year ended March 31, 2012 increased 81% to $1,757,855 compared to $969,966 during the fiscal year ended March 31, 2011. Payroll expense increased as a result of hiring additional personnel, including a sales director and engineering personnel, in anticipation of expansion and growth in sales and the further development of the aforementioned 2100, firegate technology and several other contemplated technologies. Payroll expense was 11% of total revenues in fiscal 2012 compared to 12% in fiscal 2011. Included in payroll expense were executive management bonuses of $341,125 and $79,000 during 2012 and 2011,
respectively. Management bonuses were determined subjectively as a reward for their efforts in our success. We anticipate future management bonuses may similarly be awarded based upon the determination of the board of directors, or a compensation committee if one is established by the board of directors. We expect payroll expense will increase in the upcoming fiscal year as we continue efforts to expand our sales force and associated support and logistical personnel in the U.S. market.

Depreciation Expense

Depreciation expense, not related to cost of sales, during fiscal 2012 was $159,421 or 118% higher than fiscal 2011. Depreciation expense increased in 2012 primarily due to the addition of the Lindon, Utah location and some production equipment as we expanded our capacity. We do not anticipate major asset acquisitions during 2013 which would lead to increased depreciation expense.

Total Other Expense

During the fiscal year ended March 31, 2012 total other expense decreased 43% to $16,395 as a decrease in interest expense and an increase in rental income were only partially offset by a decrease in interest income during the year. While we anticipate interest expense will continue to decrease, we do not expect to realize rental or significant interest income in upcoming quarters. We do not expect total other expense to increase significantly in upcoming fiscal quarters.

Net Income Before Income Tax

Net income before income taxes during the 2012 fiscal year increased to $4,351,222 from $2,312,674 during fiscal 2011. This 88% increase was primarily the result of the 93% increase in gross profit which was only partially offset by the 99% increase in total operating expense.

Income Tax Expense

Income tax expense increased from $686,211 during fiscal 2011 to $1,163,451 during fiscal 2012, a 70% increase. We expect the tax rate to be close to the statutory rate in subsequent years. We anticipate that as revenues grow, our income tax expense will also be higher. We have exhausted our tax credits associated with the Canadian small business deductions from prior years, thus we expect taxes as a percentage of revenue to be higher than in prior periods in which we made a profit. During 2011 we realized our first taxable income in the United States. Accordingly, we exhausted our net operating loss carryovers in the U.S.
and accrued approximately $17,191 of income tax. The balance of our income tax expense for 2012 was National and Provincial income taxes in Canada. As revenue and profits from U.S. operations expand we expect our income tax expense obligations in the U.S. will increase accordingly.

17

Foreign Currency Translation Gain (Loss)

Our consolidated financial statements are presented in U.S. dollars. Our functional currency is Canadian dollars. Our financial statements were translated to U.S. dollars using year-end exchange rates for the balance sheet and weighted average exchange rates for the statements of operations. Equity transactions were translated using historical rates. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statement of operations and comprehensive income.

Therefore, the translation adjustment in our consolidated financial statements represents the translation differences from translation of our financial statements. As a result, the translation adjustment is commonly, but not always, positive if the average exchange rates are lower than exchange rates on the date of the financial statements and negative if the average exchange rates are higher than exchange rates on the date of the financial statements.

During the year ended March 31, 2012, we recognized a foreign currency translation loss of $147,061 compared to foreign currency translation gain of $365,863 during the year ended March 31, 2011. This loss was the result of a weakening of the Canadian dollar versus the US dollar in the reporting period.

Total Comprehensive Income

For the foregoing reasons, we realized a total comprehensive income of $3,038,265 during the fiscal year ended March 31, 2012, compared to total comprehensive income of $1,988,246 during the fiscal year ended March 31, 2011.

Earnings Per Share

For the fiscal year ended March 31, 2012 we realized $0.07 per share on a basic and on a fully diluted basis compared to $0.04 per share on a basic and on a fully diluted basis for the fiscal year ended March 31, 2011.

Liquidity and Capital Resources

We have not required any financing during the past two fiscal years. We have a $400,000 revolving credit line with a local banking institution that we also use from time to time to satisfy short-term fluctuations in cash flows, but we have not accessed this credit line during the past two fiscal years. At March 31, 2012 we had $-0- outstanding on our line of credit.

As of March 31, 2012 we had total current assets of $8,143,468 and total assets of $10,125,758 including cash and cash equivalents of $1,914,877. At March 31, 2012 total liabilities were $1,494,182, all of which were current liabilities.

18

During the fiscal years ended March 31, 2012 and 2011 cash was primarily used to fund expansion of our facilities. See below for additional discussion and analysis of cash flow.

Year ended

March 31, 2012

Year ended

March 31, 2011

Net cash provided by (used in) operating activities

$

1,604,135

$

(213,916)

Net cash used in investing activities

$

(1,487,628)

$

(210,519)

Net cash provided by (used in) financing activities

$

-

$

-

Effect of exchange rate changes on cash

$

108,984

$

182,064

NET INCREASE (DECREASE) IN CASH

$

225,491

$

(242,371)

Net cash provided by our operating activities during fiscal 2012 was $1,604,135. As discussed above, during the fiscal year ended March 31, 2012 we realized a significant increase in net income which was partially offset by increases in our accounts receivable of $2,049,959 and in inventories of $703,223. Our accounts receivable have increased due to increased sales. We have expanded our inventories to fulfill our expected sales demand. Our accounts payable and accrued income taxes have also increased as a result of the additional inventory purchases and our profitability. At March 31, 2012 we have working capital of $6,649,286. We have
no current capital commitments outside of general operations and do not anticipate any in the near future.

Net cash used in investing activities during fiscal 2012 was $1,487,628 as we built out and furnished our U.S. facilities.

As of March 31, 2012 we had cash of $1,914,877 compared to $1,689,386 as of March 31, 2011. We believe that our cash reserves are sufficient to meet our operating needs for the next twelve months.

Summary of Material Contractual Commitments

The following table lists our significant commitments as of March 31, 2012.

Contractual Commitments

Total

Payments Due by Fiscal Year

Less than

1 year

1-3 years

3-5

years

More than

5 years

Office Lease

$32,175

$17,550

$14,625

$ -

$ -

Total

$32,175

$17,550

$14,625

$ -

$ -

(1)

For additional information regarding our office lease please see Note 8 - Commitments and Contingencies to the Notes to our Consolidated Financial Statements included with this report.

19

Inflation

We believe that inflation has not had a significant impact on our operations since inception.

Seasonality

Activity of our customers will sometimes be affected by weather and season. As the majority of our operations are currently in western Canada, sales may slow due to winter conditions that may hamper the ability of our customers to build out new locations or maintain and access current locations. We typically have our strongest revenue growth cycles in the non-winter months and into the third and fourth calendar quarters. As we expand geographically we should experience a diversification of revenue sources so seasonality should be less of an issue in the future. As we expand into Texas and recognize sales throughout the U.S.
and in Brazil and other less seasonal climates, this seasonality effect should lessen over time.

Off-Balance Sheet Arrangements

As of March 31, 2012 and 2011 we had no off-balance sheet arrangements.

Recently Issued Financial Accounting Standards

We have evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on our financial position, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

As a smaller reporting company, as defined in Rule 12b-2 promulgated under of the Securities Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide this the information requested by this Item.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements and supplementary data required by this item are included at page F-1 herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

20

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this annual report, management performed, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting described below our Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, 2012, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports filed or submitted by us
under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive officer and principal financial officer and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those
policies and procedures that:

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of March 31, 2012 we conducted an assessment, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based upon this assessment, we determined that there are material weaknesses affecting our internal control over financial reporting and have
concluded that our internal control over financial reporting was not effective as of the end of the period covered by this report.

21

The matters involving internal controls and procedures that our management considers to be material weaknesses under COSO and Commission rules are: (1) lack of a functioning audit committee and lack of independent directors on our board of directors, resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting
processes. The aforementioned potential material weaknesses were identified by our Chief Financial Officer in connection with the preparation of our financial statements as of March 31, 2012 who communicated the matters to our management and board of directors.

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on our financial results. However, the lack of a functioning audit committee and lack of a majority of independent directors on our board of directors, resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures, can impact our financial statements.

Attestation Report of Independent Registered Public Accounting Firm

This annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Management’s Remediation Initiatives

Although we are unable to meet the standards under COSO because of the limited resources available to a company of our size, we are committed to improving our financial organization. As funds become available, we will undertake to: (1) create a position to segregate duties consistent with control objectives, (2) increase our personnel resources and technical accounting expertise within the accounting function (3) appoint one or more outside directors to our board of directors who shall be appointed to a Company audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and (4) prepare and
implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

22

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur
because of simple error or mistake. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

The following table sets forth, as of June 19, 2012, our directors, nominees and executive officers, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until their successors are duly elected by the stockholders. Officers and other employees serve at the will of the board of directors.

Name of Director or

Executive Officer

Age

Positions with

the Company

Director Since

Officer Since

Brenton W. Hatch

61

Chief Executive Officer, President and Director

November 2008

October 2008

Harold Albert

49

Chief Operating Officer and Director

November 2008

October 2008

Andrew Limpert

42

Chief Financial Officer and Director

November 2007

November 2007

The above individuals serve as executive officers and/or directors. A brief description of their positions, proposed duties and their background and business experience follows:

23

Brenton W. Hatch. Mr. Hatch co-founded Profire Combustion, Inc. in 2002. Since that time he has served as the Chief Executive Officer and General Manager of the Company. Mr. Hatch has been responsible for the day-to-day operations of Profire Combustion since its inception. Prior to founding Profire Combustion, between 2001 and 2002 Mr. Hatch was a Management Consultant and General Manager of Titan Technologies, Inc., an oilfield service and distribution company in Edmonton, Alberta, Canada. In this position, Mr. Hatch performed an in-depth analysis of the
operations and management of all divisions of Titan Technologies. Based on his analysis, Mr. Hatch implemented company-wide operational changes to improve company performance. From 1989 to 2000 Mr. Hatch served as President and Chief Executive Officer of Keaton International, Inc., an educational services company based in Edmonton, Alberta, Canada. Mr. Hatch managed all executive functions of the company and particularly focused on the development and management of the company’s educational services. During his time at Keaton International, Mr. Hatch led corporate networking and marketing campaigns world-wide. Mr. Hatch earned a Bachelor’s Degree in Education from the University of Alberta in 1974. Mr. Hatch is not, nor has he in the past five years been a nominee or director of any other SEC registrant or
registered investment company. We considered Mr. Hatch’s experience as a founder and as the principal executive officer of Profire Combustion, as well as his previous management and operational oversight experience in concluding that he should serve as a director of the Company.

Harold Albert. Mr. Albert co-founded Profire Combustion, Inc. in 2002. He has served as the President and Chief Operating Officer of Profire Combustion since that time. Mr. Albert is responsible for research and development of new products and services. He oversees our Canadian operations. Prior to founding Profire Combustion, Mr. Albert worked in the oil services industry for Titan Technologies, Inc. from 1996 to 2002. During that time Mr. Albert served as an Associate Manager overseeing the company’s burner division. From 1993 to
1996 Mr. Albert was employed with Natco Canada doing start up and commissioning of oil and gas facilities in both Canada and Russia. Mr. Albert is not, nor has he in the past five years been, a nominee or director of any other SEC registrant or registered investment company. We considered Mr. Albert’s experience as a founder and principal operating officer, combined with his previous management and operational experience in concluding that he should serve on the Company’s board of directors.

Andrew Limpert. Mr. Limpert graduated from the University of Utah with a Bachelors of Science degree in Finance in 1994. He earned a Masters of Business Administration with an emphasis in Finance from Westminster College in 1998. Mr. Limpert joined The Flooring Zone, Inc. in November 2007. From 1998 to 2008, Mr. Limpert was an investment advisor with Belsen Getty, LLC. providing wealth management direction and strategic and financial advice for several investment banks. For the past 15 years he has founded, consulted on and funded numerous businesses in the private
and public arenas. In 2007 he became the chairman of the board of directors of Nine Mile Software Inc., a rebalancing and mutual fund trading software developer. Nine Mile Software became an SEC registrant during 2008. He resigned as Chairman of Nine Mile in April of 2011. During the past five years Mr. Limpert has also served as a director and interim CEO of Ohr Pharmaceutical Inc., a New York based biotech incubator. Ohr Pharmaceutical is also an SEC registrant. Mr. Limpert resigned as an officer and director of Ohr Pharmaceutical in April 2010. Mr. Limpert is not, nor has he in the past five years been, a nominee or director of any registered investment company. We considered Mr. Limpert’s extensive investment experience and his related finance and educational background in concluding that he should serve on the
Company’s board of directors.

24

Family Relationships

There are no family relationships among any of our directors or executive officers.

Involvement in Certain Legal Proceedings

During the fiscal year the Commission issued an administrative order instituting cease-and-desist proceedings against Andrew Limpert, the Company’s CFO, for alleged violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 204(a), 204A, 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rules 204-2(a), 204A-1 and 206(4)-7 promulgated thereunder sometime between 2005 and 2008 while Mr. Limpert was affiliated with Belsen Getty, LLC. Belsen Getty, which at the time was a registered investment adviser, and the firm’s majority owner were also named in the administrative
order. The principal allegations against Mr. Limpert are related to record keeping violations and failures to supervise and make adequate disclosure. The violations alleged in the order are not related to Mr. Limpert’s involvement with Profire Energy.

The board of directors believes Mr. Limpert continues to be capable to serve as the Company’s CFO and on the Company’s board of directors.

Other than the foregoing, during the past ten years none of our executive officers, directors or persons nominated to become a director has been involved in any of the following events that could be material to an evaluation of his ability or integrity, including:

(1) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

(2) Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting the following activities:

(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity poll operator, floor broker, leverage transaction merchant, and other person regulated by the Commodity Futures Trading Commission (“CFTC”), or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, bank savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

(ii) Engaging in any type of business practice; or

(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws.

25

(4) Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the rights of such person to engage in any activity described in (3)(i) above, or to be associated with persons engaged in any such activity.

(5) Being found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended or vacated.

(6) Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.

(7) Being the subject of, or a party to any Federal or State judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

(i) Any Federal or State securities or commodities law or regulations; or

(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(8) Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and any persons who own more than 10% of the common stock of the Company to file with the Securities and Exchange Commission reports of beneficial ownership and changes in beneficial ownership of common stock. Officers and directors are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to us or written representations that no other reports were required, we believe that during the fiscal year ended March 31, 2012 all filing requirements applicable
to our officers, directors, greater than 10% stockholders or any other person subject to Section 16 of the Exchange Act were met on a timely basis.

26

Code of Ethics

Our board of directors has adopted a code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer or controller and to persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote:

•

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

•

full, fair, timely, accurate and understandable disclosure in reports and documents that we file with, or submit to the Commission and in our other public communications;

•

compliance with applicable governmental laws, rules and regulations;

•

prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

•

accountability for adherence to the code.

A copy of our code of ethics was filed with the Commission as Exhibit 14.1 to the Company’s annual report on Form 10-KSB for the fiscal year ended December 31, 2006 and may be viewed by accessing that report on the Commission’s website at www.sec.gov. A copy of our code of ethics has also been posted on our website and may be viewed at www.profireenergy.com. We will provide a copy of our code of ethics, without charge, to any person upon receipt of written request for such delivered to our corporate headquarters. All such requests should be sent care of Profire
Energy, Inc., Attn. Corporate Secretary, 321 South 1250 West, Suite 1, Lindon, Utah 84042.

Committees of the Board of Directors

The OTCBB does not require the Company to have an audit committee, a compensation committee or a corporate governance and nominating committee and the board does not currently have standing audit, compensation or corporate governance and nominating committees. Our board of directors has determined that it is in the Company’s best interest to have the full board fulfill the functions that would be performed by these committees. The full board of directors is responsible for selection, review and oversight of the Company’s independent registered public accounting firm; approval of all audit, review and attest services provided by the
independent registered public accounting firm; the integrity of the Company’s reporting practices and the evaluation of the Company’s internal controls and accounting procedures. The board is also responsible for the pre-approval of all non-audit services provided by its independent registered public accounting firm. Non-audit services are only provided by our independent registered public accounting firm to the extent permitted by law. Pre-approval is required unless a “de minimus” exception is met. To qualify for the “de minimus” exception, the aggregate amount of all such non-audit services provided to the Company must constitute not more than 5% of the total amount of revenues paid by us to our independent registered public accounting firm during the fiscal year in which the non-audit services are provided; such services were not recognized by us
at the time of the engagement to be non-audit services; and the non-audit services are promptly brought to the attention of the board and approved prior to the completion of the audit by the board or by one or more members of the board to whom authority to grant such approval has been delegated.

27

As we do not currently have a standing audit committee, we do not at this time have an “audit committee financial expert” as defined under the rules of the Commission. The board believes that none of the current board members would qualify as an audit committee financial expert.

Our full board of directors also participates in the consideration of director nominees. In general, when the board determines that expansion of the board or replacement of a director is necessary or appropriate, the board will review through candidate interviews with members of management, consult with the candidate’s associates and through other means determine a candidate’s honesty, integrity, reputation in and commitment to the community, judgment, personality and thinking style, residence, willingness to devote the necessary time, potential conflicts of interest, independence, understanding of financial statements and issues, and the
willingness and ability to engage in meaningful and constructive discussion regarding Company issues. The board will review any special expertise, for example, that qualifies a person as an audit committee financial expert, membership or influence in a particular geographic or business target market, or other relevant business experience. To date we have not paid any fee to any third party to identify or evaluate, or to assist in identifying or evaluating, potential director candidates.

Our board may establish committees from time to time to facilitate our management.

Board Diversity

While we do not have a formal policy regarding the consideration of diversity in identifying and evaluating potential director candidates, the board considers the interplay of a candidate’s knowledge, expertise, skills and experience with that of the other members of the board of directors in order to build a board of directors that is effective, collegial and responsive to the needs of the Company. We believe this analysis results in a board of directors that is diverse in knowledge, expertise, skills, experience and viewpoint.

Procedures for Security Holders to Nominate Candidates to the Board of Directors

During the fiscal year, there were no changes made to the procedures by which shareholders may nominate candidates to our board of directors. The full board of directors will consider all director candidates nominated by shareholders during such times as the Company is actively considering appointment of new directors. Candidates recommended by shareholders will be evaluated based on the same criteria described above. Shareholders desiring to suggest a candidate for consideration should send a letter to the Company’s Corporate Secretary and include:

28

•

a statement that the writer is a shareholder (providing evidence if the person’s shares are held in street name) and is proposing a candidate for consideration;

•

the name and contact information for the candidate;

•

a statement of the candidate’s business and educational experience;

•

information regarding the candidate’s qualifications to be a director, including but not limited to an evaluation of the factors which the board would consider in evaluating a candidate;

•

information regarding any relationship or understanding between the proposing shareholder and the candidate;

•

information regarding potential conflicts of interest; and

•

a statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected.

Because of the small size of the Company and the limited need to seek additional directors, there is no assurance that all shareholder proposed candidates will be fully considered, that all candidates will be considered equally, or that the proponent of any candidate or the proposed candidate will be contacted by the Company or the board, and no undertaking to do so is implied by the willingness to consider candidates proposed by shareholders.

Item 11. Executive Compensation

The following table summarizes the total compensation paid to the person serving as our principal executive officer and our two most highly compensated executive officers other than our principal executive officer. These individuals are referred to herein as “named executive officers” or “NEOs.” Other than as disclosed herein, none of our employees were paid in excess of $100,000 during the fiscal years ended March 31, 2012 and 2011.

Summary Compensation Table

Name and

Principal Position

Year

Salary

($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

All Other

Compensation(1)

($)

Total

($)

Brenton W. Hatch

2012

208,858

150,000

-0-

-0-

22,800

381,658

CEO and Director

2011

199,896

33,500

-0-

-0-

25,450

258,846

Andrew Limpert

2012

168,000

40,000

-0-

-0-

16,800

224,800

CFO and Director

2011

120,000

12,000

-0-

-0-

16,800

148,800

Harold Albert

2012

204,000

151,125

-0-

-0-

30,338

385,463

COO and Director

2011

204,000

33,500

-0-

-0-

30,046

267,546

(1)

For a breakdown of the compensation components included in “All Other Compensation” please see the “All Other Compensation” table below.

29

All Other Compensation

The table below provides additional information regarding all other compensation awarded to the named executive officers as disclosed in the “All Other Compensation” column of the “Summary Compensation Table” above.

Name

Year

Vehicle Allowance, Fuel,
Maintenance and Related Costs

($)

Cell Phone Expenses

($)

Medical Insurance

Premiums

($)

Brenton W, Hatch

2012

12,000

-0-

10,800

2011

9,600

3,850

12,000

Andrew Limpert

2012

9,600

-0-

7,200

2011

9,600

-0-

7,200

Harold Albert

2011

24,853

-0-

5,484

2011

18,474

-0-

11,572

We do not have a standing compensation committee, rather our Chief Executive Officer (“CEO”) evaluates officer and employee compensation issues subject to the approval of our board of directors. Our CEO makes recommendations to the board of directors as to employee benefit programs and officer and employee compensation. In the past, our CEO has made recommendations to the board of directors regarding his own compensation and we have no policy prohibiting the CEO from doing so. Our board of directors may seek input from the CEO as to his compensation, but CEO compensation must be approved by a majority of our board of directors.

Salary

Salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. The salary for each named executive officer is typically set at the time the individual is hired based on the factors discussed in the preceding sentence and the negotiation process between the Company and the named executive officer. Thereafter, changes to annual salary, if any, are determined based on several factors, including evaluation of performance, anticipated financial performance, economic condition and local market and labor conditions. The employment agreements of Mr.
Hatch, Mr. Albert and Mr. Limpert provide for a full-time monthly salary of $17,000 per month. During fiscal 2012, Mr. Limpert was not employed by the Company on a full-time basis. His salary was adjusted to reflect the amount of time dedicated to his employment with the Company. The board did not approve salary increases for the upcoming fiscal year for any of the named executive officers.

Bonuses

We may also make cash awards to our named executive officers and employees that are not part of any pre-established, performance-based criteria. Awards of this type are completely discretionary and subjectively determined by our board of directors at the time they are awarded. In the event this type of cash award is made, it is reflected in the “Summary Compensation Table” under a separate column entitled “Bonus.” During the 2012 fiscal year, the board of directors, of its own discretion, awarded Christmas bonuses of $150,000 to Mr. Hatch, $151,125
to Mr. Albert and $40,000 to Mr. Limpert. The bonuses were not awarded pursuant to any pre-established, performance-based criteria set by the compensation committee. Rather, the bonuses were awarded in recognition of the efforts of the named executive officers to control costs and expenses and improve Company profitability, through revenue expansion, leadership and product innovation. The Company was under no obligation to award the cash bonuses and is under no obligation to award future cash bonuses.

30

Employer Benefit Plans

At the current time, we do not provide any retirement, pension, or other benefit plans to our named executive officers; however, the board of directors may adopt plans as it deems reasonable under the circumstances.

Employment Agreements

We have entered into employment agreements with Mr. Hatch and Mr. Albert in November 2008, and with Mr. Limpert in January 2009. The employment agreements provided for an initial employment term of three calendar years from the date of the agreements. With the expiration of the initial term, the agreements are now self-renewing for additional one year periods for ten years unless terminated in accordance with the terms of the agreements.

The employment agreements of Mr. Hatch and Mr. Albert provide that they will devote, on a full-time basis, their best ability and talents to the business of the Company. The agreements prohibit the individuals from providing consulting services or accepting employment with any other party unless pre-approved by the Company. Mr. Limpert’s employment agreement provided that he would initially be employed on a part-time, as needed basis.

In addition to a monthly salary, the employment agreements provide for reimbursement of all reasonable and necessary out-of-pocket personal expenses up to $3,000 per month for Mr. Hatch and Mr. Albert and up to $2,000 per month for Mr. Limpert. Expense items exceeding these limits must receive Company approval. The agreements provide for an $800 per month auto allowance for Mr. Hatch and Mr. Albert. Mr. Limpert’s agreement provides that he is entitled to receive an $800 per month auto allowance so long as he maintains at least half-time employment with the Company.

The employment agreements provide that each of the named executive officers will be entitled to equal treatment with other principal officers of the Company with regard to medical and dental plans and benefits, retirement or similar plans, life insurance, sick leave, vacation or disability. The Company will provide $1,000 per month for health/dental premiums and $1,000 per month matching retirement benefits when the Company establishes such a plan.

The employment agreements of the named executive officers provide for the following payments in the event of termination of employment.

•

The individual may be terminated without cause by the Company upon 90 days prior written notice. If terminated without cause, the individual shall be entitled to six months salary and health and other benefits.

•

For cause upon prior written notice. If terminated for cause the individual shall be entitled to his salary and any employee rights or compensation which would vest in the month of termination pro-rated through the date of termination.

•

By resignation. If the individual resigns, he shall be entitled to receive his current monthly salary and other compensation. In the event of a resignation, employment shall terminate on the earlier of, 30 days following its tender and the date the resignation is accepted by the Company.

•

For disability or death. The Company shall have the option to terminate the agreement should the individual no longer be able to perform his essential functions. In the event of termination for death or disability the individual shall be entitled to the same compensation and benefits as if the agreement had been terminated without cause.

We do not have agreements, plans or arrangements, written or unwritten, with any of our named executive officers that would provide for payments or other benefits to any of our named executive officers in the event of a change in control of the Company or a change in the responsibilities of any named executive officer following a change in control of the Company.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

None of the named executive officers held outstanding equity awards at our fiscal year end.

DIRECTOR COMPENSATION

Each of our directors is also a named executive officer and employee of the Company. All compensation earned by Mr. Hatch, Mr. Albert and Mr. Limpert was compensation for services rendered in their capacity as employees of the Company. They received no compensation for serving on our board of directors during the 2012 or 2011 fiscal years. For details regarding the compensation received by each of our directors please see the Summary Compensation Table on page 29 of this annual report on Form 10-K.

The following table sets forth as of June 19, 2012 the name and the number of shares of our common stock, par value of $0.001 per share, held of record or beneficially by each person who held of record, or was known by us to own beneficially, more than 5% of the 45,000,000 issued and outstanding shares of our common stock, and the name and shareholdings of each director and of all officers and directors as group.

32

Type of Security

Name and Address

Amount & Nature of
Beneficial Ownership

% of Class

Common

Brenton W. Hatch(1)

15,750,000

35%

321 South 1250 West, Suite 1

Lindon, Utah 84042

Common

Harold Albert(1)

15,750,000

35%

Bay 12, 55 Alberta Ave.

Spruce Grove, Alberta, Canada T7X 3A6

Common

Andrew Limpert(1)

3,888,085

9%

321 South 1250 West, Suite 1

Lindon, Utah 84042

Common

Shelly Nichol & Timothy Paul Nichol

3,217,991

7%

Bay 12, 55 Alberta Ave.

Spruce Grove, Alberta, Canada T7X 3A6

All executive officers and directors as a group (3 persons)

35,388,085

79%

TOTAL

38,606,076

86%

(1) Mr. Hatch, Mr. Albert and Mr. Limpert are executive officers and directors of the Company.

Change in Control

To the knowledge of the management, there are no present arrangements or pledges of our securities that may result in a change in control of the Company.

Securities Authorized for Issuance under Equity Compensation Plans

Plan category

Number of securities

to be issued upon

exercise of

outstanding options,

warrants and rights

(a)

Weighted-average

exercise price of

outstanding

options, warrants

and rights

(b)

Number of securities

remaining available for future
issuance under equity

compensation plans

(excluding securities
reflected in columns (a))

(c)

Equity compensation plans approved by security holders

1,010,000

$0.34

3,445,000

Equity compensation plans not approved by security holders

-0-

n/a

-0-

Total

1,010,000

$0.34

3,445,000

33

On May 13, 2003 we adopted The Flooring Zone, Inc., 2003 Stock Incentive Plan (the “2003 Plan”). The 2003 Plan allows the Company to grant options to its key employees, officers, directors, consultants, advisors and sales representatives to purchase up to 500,000 shares of its $.001 par value restricted common stock at an exercise price to be determined by the board of directors at the time of grant. In 2003 the Company granted 45,000 options, none of which were granted to any of the named executive officers. These options vested immediately and were exercised in 2003.

In September 2009 our board of directors approved grants of options to purchase up to 410,000 shares under the 2003 Plan to six individuals, none of whom are executive officers or directors of our Company. The options are exercisable at a price of $0.40, the closing price of our common stock on the OTCBB on the grant date. The options expire five years from the grant date. The options vest equally over three years with vesting occurring on the grant anniversary date.

As of the date of this report there are currently 45,000 shares available for award under the 2003 Plan.

In November 2009 our shareholders approved the adoption of the Profire Energy, Inc., 2010 Equity Incentive Plan (the “2010 Plan”). Under the 2010 Plan our key employees, officers, directors and other individuals or entities may be awarded stock options or granted shares of our common stock. The term of the 2010 Plan is 10 years. The 2010 Plan permits the granting of up to a maximum of 4,000,000 shares of common stock. The aggregate number of shares of common stock that may be issued to any individual or entity under the 2010 Plan shall not exceed twenty percent (20%) of the aggregate number of shares referred to in the
preceding sentence. The total number of shares issuable upon exercise of all outstanding options shall not exceed a number of shares which is equal to thirty percent (30%) of the then outstanding shares of the Company.

In February 2011 our board of directors granted options to purchase an aggregate of 600,000 shares of our restricted common stock to three Company employees, none of whom are executive officers or directors of the Company. The options have an exercise price of $0.30 per share, which was equal to 85% of the market price of our common shares on the date of grant, as allowed under the terms of the 2010 Plan. The options vest in equal amounts over five years, with the initial portion vesting on the one-year anniversary of the date of grant. Vesting is contingent upon continued employment with the Company. The options expire six years from the date of grant.

The board has determined that none of the current directors would qualify as an independent director as that term is defined in the listing standards of the NYSE Amex as each of our current directors is also an executive officer of the Company. Such independence definition includes a series of objective tests, including that the director is not an employee of the company and has not engaged in various types of business dealings with the company.

Item 14. Principal Accountant Fees and Services

Sadler, Gibb and Associates, LLC served as the Company’s independent registered public accounting firm for the fiscal year ended March 31, 2012 and Child, Van Wagoner & Bradshaw, PLLC served as the Company’s independent registered public accounting firm for the fiscal year ended March 31, 2011. Sadler, Gibb and Associates, LLC, is expected to serve as the Company’s independent registered public accounting firm for the 2013 fiscal year. Principal accounting fees for professional services rendered for us by Sadler, Gibb and Associates, LLC, and Child, Van Wagoner & Bradshaw, PLLC for the fiscal years ended March 31, 2012 and 2011, are summarized as follows:

Fiscal 2012

Fiscal 2011

Audit

$40,000

$49,384

Audit related

-0-

-0-

Tax

-0-

-0-

All other

-0-

-0-

Total

$40,000

$49,384

Audit Fees. Audit fees were for professional services rendered in connection with the audit of the annual financial statements included in our annual report on Form 10-K, review of the financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

Board of Directors Pre-Approval Policies and Procedures. At its regularly scheduled and special meetings, our board of directors, in lieu of an established audit committee, considers and pre-approves any audit and non-audit services to be performed by our independent registered public accounting firm. Our board of directors has the authority to grant pre-approvals of non-audit services.

Our board of directors has not, as of the time of filing this annual report on Form 10-K with the Commission, adopted policies and procedures for pre-approving audit or permissible non-audit services performed by our independent auditors. Instead, the board of directors as a whole has pre-approved all such services. In the future, our board of directors may approve the services of our independent registered public accounting firm pursuant to pre-approval policies and procedures adopted by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of
director’s responsibilities to our management.

The board of directors has determined that the services provided by its independent registered public accounting firm described above are compatible with maintaining independence as our independent registered public accounting firm.

35

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

Financial Statements

The following financial statements of the registrant are included in response to Item 8 of this annual report:

(1) Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the Commission on October 14, 2008.

(2) Incorporated by reference to the Registration Statement of the Registrant on Form SB-2 filed with the Commission on September 24, 2004.

(3) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed with the Commission on February 13, 2009.

(4) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2008.

(5) Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the Commission on January 14, 2009.

(6) Incorporated by reference to Registrant’s Annual Report on Form 10-KSB filed with the Commission on April 17, 2007.

(7) Incorporated by reference to Registrant’s Revised Definitive Proxy Statement on Schedule 14A filed with the Commission on November 10, 2009.

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

PROFIRE ENERGY, INC.

Date: June 28, 2012

By:

/s/ Brenton W. Hatch

Brenton W. Hatch

Chief Executive Officer

(Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dated indicated.

Consolidated Statements of Operations for the years ended March 31, 2012 and 2011

F-4

Consolidated Statement of Stockholders’ Equity from March 31, 2010 through March 31, 2012

F-5

Consolidated Statements of Cash Flows for the years ended March 31, 2012 and 2011

F-6

Notes to Consolidated Financial Statements

F-7

F-1

F-2

PROFIRE ENERGY, INC. AND SUBSIDIARY

Consolidated Balance Sheets

ASSETS

March 31,

March 31,

2012

2011

CURRENT ASSETS

Cash and cash equivalents

$

1,914,877

$

1,689,386

Accounts receivable, net

4,236,240

2,294,780

Marketable securities-available for sale

840

3,306

Inventories

1,968,740

1,300,047

Deferred tax asset

12,569

-

Prepaid expenses

10,202

885

Total Current Assets

8,143,468

5,288,404

PROPERTY AND EQUIPMENT, net

1,982,290

710,460

TOTAL ASSETS

$

10,125,758

$

5,998,864

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

645,215

$

206,582

Accrued liabilities

251,137

36,137

Income taxes payable

597,830

243,364

Total Current Liabilities

1,494,182

486,083

TOTAL LIABILITIES

1,494,182

486,083

STOCKHOLDERS' EQUITY

Preferred shares: $0.001 par value,

10,000,000 shares authorized: no shares

issued and outstanding

-

-

Common shares: $0.001 par value,

100,000,000 shares authorized: 45,000,000

shares issued and outstanding

45,000

45,000

Additional paid-in capital

74,343

(6,187)

Accumulated other comprehensive income

484,692

634,198

Retained earnings

8,027,541

4,839,770

Total Stockholders' Equity

8,631,576

5,512,781

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

10,125,758

$

5,998,864

The accompanying notes are a integral part of these consolidated financials statements.

F-2

PROFIRE ENERGY, INC. AND SUBSIDIARY

Consolidated Statements of Operations and Other Comprehensive Income

For the Years Ended

March 31,

2012

2011

REVENUES

Sales of goods, net

$

14,875,652

$

7,186,734

Sales of services, net

1,049,561

847,192

Total Revenues

15,925,213

8,033,926

COST OF SALES

Cost of goods sold

6,170,073

2,812,323

Cost of goods sold-services

717,796

529,821

Total Cost of Goods Sold

6,887,869

3,342,144

GROSS PROFIT

9,037,344

4,691,782

OPERATING EXPENSES

General and administrative expenses

2,752,451

1,307,580

Payroll expenses

1,757,855

969,966

Depreciation expense

159,421

73,017

Total Operating Expenses

4,669,727

2,350,563

INCOME FROM OPERATIONS

4,367,617

2,341,219

OTHER INCOME (EXPENSE)

Interest expense

(20,370)

(32,272)

Rental income

3,600

-

Interest income

375

3,727

Total Other Income (Expense)

(16,395)

(28,545)

NET INCOME BEFORE INCOME TAXES

4,351,222

2,312,674

INCOME TAX EXPENSE

1,163,451

686,211

NET INCOME

$

3,187,771

$

1,626,463

UNREALIZED HOLDING GAIN (LOSS)

ON AVALIABLE FOR SALE SECURITIES

$

(2,445)

$

(4,080)

FOREIGN CURRENCY TRANSLATION GAIN (LOSS)

(147,061)

365,863

TOTAL COMPREHENSIVE INCOME

$

3,038,265

$

1,988,246

BASIC EARNINGS PER SHARE

$

0.07

$

0.04

FULLY DILUTED EARNINGS PER SHARE

$

0.07

$

0.04

BASIC WEIGHTED AVERAGE NUMBER

OF SHARES OUTSTANDING

45,000,000

45,000,000

FULLY DILUTED WEIGHTED AVERAGE NUMBER

OF SHARES OUTSTANDING

45,218,238

45,229,413

The accompanying notes are a integral part of these consolidated financials statements.

F-3

PROFIRE ENERGY, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders' Equity

Additional

Other

Total

Common Stock

Paid-In

Comprehensive

Retained

Stockholders'

Shares

Amount

Capital

Income

Earnings

Equity

Balance, March 31, 2010

45,000,000

$

45,000

$

(51,449)

$

272,415

$

3,213,307

$

3,479,273

Fair value of options vested

-

-

45,262

-

-

45,262

Unrealized holding gains on

available for sale securities

-

-

-

(4,080)

-

(4,080)

Foreign currency translation

-

-

-

365,863

-

365,863

Net Income for the year

ended March 31, 2011

-

-

-

-

1,626,463

1,626,463

Balance, March 31, 2011

45,000,000

45,000

(6,187)

634,198

4,839,770

5,512,781

Fair value of options vested

-

-

80,530

-

-

80,530

Unrealized holding gains on

available for sale securities

-

-

-

(2,445)

-

(2,445)

Foreign currency translation

-

-

-

(147,061)

-

(147,061)

Net Income for the year

ended March 31, 2012

-

-

-

-

3,187,771

3,187,771

Balance, March 31, 2012

45,000,000

$

45,000

$

74,343

$

484,692

$

8,027,541

$

8,631,576

The accompanying notes are a integral part of these consolidated financials statements.

F-4

PROFIRE ENERGY, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the Years Ended

March 31,

2012

2011

OPERATING ACTIVITIES

Net Income

$

3,187,771

$

1,626,463

Adjustments to reconcile net income to

net cash used by operating activities:

Depreciation expense

198,707

91,024

Bad debt expense

46,203

7,377

Stock options issued for services

80,530

45,262

Changes in operating assets and liabilities:

Changes in accounts receivable

(2,049,959)

(1,102,711)

Changes in inventories

(703,223)

(615,346)

Changes in prepaid expenses

(9,341)

156

Changes in accounts payable and accrued liabilities

498,981

(3,141)

Changes in income taxes payable

354,466

(263,000)

Net Cash Provided by (Used in) Operating Activities

1,604,135

(213,916)

INVESTING ACTIVITIES

Purchase of fixed assets

(1,487,628)

(210,519)

Net Cash Used in Investing Activities

(1,487,628)

(210,519)

FINANCING ACTIVITIES

-

-

Effect of exchange rate changes on cash

108,984

182,064

NET INCREASE (DECREASE) IN CASH

225,491

(242,371)

CASH AT BEGINNING OF YEAR

1,689,386

1,931,757

CASH AT END OF YEAR

$

1,914,877

$

1,689,386

SUPPLEMENTAL DISCLOSURES OF

CASH FLOW INFORMATION

CASH PAID FOR:

Interest

$

20,370

$

32,272

Income taxes

$

703,622

$

983,538

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Profire Energy, Inc. and Subsidiary (“the Company”) is presented to assist in understanding the Company’s financial statements. The Company’s accounting policies conform to accounting principles generally accepted in the United States of America (US GAAP). On September 30, 2008, The Flooring Zone, Inc. (“the Parent”) entered into an Acquisition Agreement with Profire Combustion, Inc. and the Shareholders of Profire Combustion, Inc. (“the Subsidiary”), subject to customary closing conditions. All conditions for closing were satisfied or waived and the transaction closed on October 9, 2008.

Pursuant to the terms and conditions of the Acquisition Agreement, 35,000,000 shares of restricted common stock of the Company were issued to the three shareholders of Profire Combustion, Inc., in exchange for all of the issued and outstanding shares of the Subsidiary. As a result of the transaction, Profire Combustion, Inc. became a wholly-owned subsidiary of the Parent and the shareholders of the Subsidiary became the controlling shareholders of the Company. For accounting purposes, the Subsidiary is considered the accounting acquirer, and the historical Balance Sheets, Statements of Operations and Other Comprehensive Income, and Statement of Cash Flow of the Subsidiary are presented as those of the
Company. The historical equity information is that of Profire Combustion, Inc., the accounting acquiree. The recapitalization required pursuant to this merger resulted in a negative additional paid-in capital balance.

Organization and Line of Business

The Parent was incorporated on May 5, 2003 in the State of Nevada. The Subsidiary was incorporated on March 6, 2002 in the province of Alberta, Canada.

The Company provides products and services for burners and heaters for the oil and gas extraction industry in the Canadian and US markets.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basic Earnings Per Share

The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 218,238 and 107,333 stock options included in the fully diluted earnings per share as of March 31, 2012 and 2011 respectively. Basic earnings per share for the years ended March 31, 2012 and 2011 are as follows:

For the Years Ended

March 31,

2012

2011

Net income applicable to common shareholders

$

3,187,771

$

1,626,463

Weighted average shares outstanding

45,000,000

45,000,000

Basic earnings per share

$

0.07

$

0.04

Fully diluted earnings per share

$

0.07

$

0.04

F-6

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Currency and Comprehensive Income

The Company’s functional currency is the Canadian Dollar (CAD). The financial statements of the Company were translated to U.S. Dollars (USD) using year-end exchange rates for the balance sheet, and average exchange rates for the statements of operations. Equity transactions were translated using historical rates. The period-end exchange rates of 1.00274 and 1.0301 were used to convert the Company’s March 31, 2012 and 2011 balance sheets, respectively, and the statements of operations used weighted average rates of 1.0075 and 0.9836 for the years ended March 31, 2012 and 2011, respectively. All amounts in the financial statements and footnotes are presumed to be stated in USD,
unless otherwise identified. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the Statement of Operations and Comprehensive Income.

Accounting Method and Fiscal Year

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on March 31.

Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.

The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents include cash and all debt securities with an original maturity of 90 days or less. As of March 31, 2012 and 2011, book balances totaled $1,914,877 and $1,689,386, respectively. These deposits were insured entirely by insurance accounts held by the Company’s banks guaranteed by the Province of Alberta, Canada.

Accounts Receivable

Receivables from the sale of goods and services are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The allowance is calculated based on past collectability and customer relationships. The Company recorded an allowance for doubtful accounts of $65,110 and $19,524 as of March 31, 2012 and 2011, respectively.

Inventory

In accordance with ARB No. 43 “Inventory Pricing,” the Company’s inventory is valued at the lower of cost (the purchase price, including additional fees) or market based on using the entire value of inventory. Inventories are determined based on the first-in first-out (FIFO) basis. Inventory consists of raw materials, finished goods held for sale and work in progress. As of March 31 inventory consisted of the following:

F-7

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventory (Continued)

March 31,

2012

March 31,

2011

Raw materials

$

2,026,108

$

1,347,749

Finished goods

-

-

Work in process

-

-

Subtotal

2,026,108

1,347,749

Reserve for Obsolescence

(57,368)

(47,702)

Total

$

1, 968,740

$

1,300,047

Revenue Recognition

The Company records sales when a firm sales agreement is in place, delivery has occurred or services have been rendered, and collectability of the fixed or determinable sales price is reasonably assured. If customer acceptance of products is not assured, the Company records sales only upon formal customer acceptance.

Advertising Costs

The Company classifies expenses for advertising as general and administrative expenses. The Company incurred advertising costs of $29,210 and $14,793 during the years ended March 31, 2012 and 2011, respectively.

Stock-Based Compensation

The Company follows the provisions of ASC 718, “Share-Based Payment.” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation.

Income Taxes

The Parent is subject to US income taxes on a stand-alone basis. The Parent and its Subsidiary file separate stand-alone tax returns in each jurisdiction in which they operate. The Subsidiary is a corporation operating in Canada and is subject to Canadian income taxes on its stand-alone taxable income. The effective rates of income tax are 27.6% and 29.7 percent for the years ended March 31, 2012 and 2011, respectively.

Research and Development

All costs associated with research and development are expensed when incurred. Costs incurred for research and development were $164,400 and $107,900 for the years ended March 31, 2012 and 2011 respectively.

Shipping and Handling Fees and Costs

The Company records all amounts billed to customers related to shipping and handling fees as revenue. The Company classifies expenses for shipping and handling costs as cost of goods sold. The Company incurred shipping and handling costs of $189,611 and $107,358 during the years ended March 31, 2012 and 2011, respectively.

F-8

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Comprehensive Income

Comprehensive income includes net income as currently reported by the Company adjusted for other comprehensive items. Other comprehensive items for the Company consist of foreign currency translation gains and losses and unrealized holding gains and losses on available for sale securities.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE 2 – PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation on property and equipment is computed using the diminishing balance method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows:

Assets

Estimated useful life

Furniture and fixtures

5 Years

Machinery and equipment

5 Years

Buildings

25 Years

Vehicles

3 Years

Computers

3 Years

Property and equipment consisted of the following as of March 31, 2012 and 2011:

2012

2011

Office Furniture and Equipment

$

258,127

$

158,202

Service and Shop Equipment

314,875

244,754

Vehicles

251,107

203,632

Land and Buildings

1,721,564

479,211

Total Property and Equipment

2,545,673

1,085,799

Accumulated Depreciation

(563,383)

(375,339)

Net Property and Equipment

$

1,982,290

$

710,460

Depreciation expense for the years ended March 31, 2012 and 2011 are as follows:

Years Ended March 31,

2012

2011

Cost of goods sold

$

39,286

$

18,007

General and administrative

159,421

73,017

Total

$

198,707

$

91,024

NOTE 3 – STOCKHOLDERS’ EQUITY

The Company had the following $0.001 par value authorized stock:

Preferred Stock 10,000,000 shares.

Common Stock 100,000,000 shares.

As of March 31, 2012 and 2011, the Company had issued 45,000,000 shares of common stock, respectively.

F-9

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 4 – PROVISION FOR INCOME TAXES

Reconciliation of US Federal/Canadian Statutory Income Tax Rate to Effective Income Tax Rate:

The following are temporary items: non-deductible write-down of marketable securities, increase or decrease in rate resulting from depreciation and loss on equipment for book purposes in excess of depreciation for income tax purposes. These temporary differences are insignificant, for 2012 and 2011.

The Company adopted the provisions of ASC 740, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the implementation of ASC 740, the Company recognized approximately no increase in the liability for unrecognized tax benefits.

The Company has no tax positions at March 31, 2012 and 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended March 31, 2012 and 2011, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at March 31, 2012 and 2011.

Net deferred tax assets arising from the warrant expense accrual as offset by the accelerated depreciation claimed by the Parent on its stand-alone tax returns is $12,569 as of March 31, 2012.

NOTE 5 – AVAILABLE FOR SALE SECURITIES

The following table sets forth the available for sale securities held by the Company as of March 31, 2012:

Company name

Symbol

Shares

Market value (USD) as of 3/31/12

Fair market value (USD)

Copper King Mining Corporation

CPRK

50,000

$ 0.000

$ -

Deep Blue Marine Inc.

DPBE

1,200,000

0.001

835

Total value of trading securities

$ 835

F-10

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 5 – AVAILABLE FOR SALE SECURITIES (CONTINUED)

The following table sets forth the available for sale securities held by the Company as of March 31, 2011:

Company name

Symbol

Shares

Market value (USD) as of 3/31/11

Fair market value (USD)

Copper King Mining Corporation

CPRK

50,000

$ 0.000

$ -

Deep Blue Marine Inc.

DPBE

1,200,000

0.003

3,306

Total value of trading securities

$ 3,306

NOTE 6 – SEGMENT INFORMATION

The Company operates in the United States and Canada. Segment information for these geographic areas is as follows:

Sales

2012

2011

Canada

$

15,055,543

$

8,033,926

United States

869,670

-

Total

$

15,925,213

$

8,033,926

Long –Lived Assets

2012

2011

Canada

$

1,596,209

$

674,372

United States

386,081

36,088

Total

$

1,982,290

$

710,460

NOTE 7 – COMMON STOCK PURCHASE OPTIONS

On October 28, 2009, the Company issued a total of 410,000 stock purchase options exercisable for the purchase of its common stock at $0.40 per share. The options were issued to key employees. The options vest 1/3 each year for 3 years. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The following weighted average assumptions used for grants as of October 28, 2009: dividend yield of zero percent; expected volatility of 127%; risk-free interest rates of 1.35% and expected life of 3.0 years. The Company recognized $40,224 and $21,788
in expense for the fair value of the options vesting during 2012 and 2011, respectively.

On February 15, 2011, the Company issued a total of 600,000 stock purchase options exercisable for the purchase of its common stock at $0.30 per share. The options were issued to key employees. The options vest over 1/5 each year for 5 years. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The following weighted average assumptions used for grants as of February 15, 2011: dividend yield of zero percent; expected volatility of 254%; risk-free interest rates of 2.02% and expected life of 2.5 years. The Company recognized $40,306 and
$5,038 in expense for the fair value of the options vesting during 2012 and 2011, respectively.

A summary of the status of the Company’s stock option plans as of March 31, 2012 and 2011 and the changes during the period are presented below:

F-11

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 7 – COMMON STOCK PURCHASE OPTIONS (CONTINUED)

2012

2011

Unexercised options, beginning of year

1,010,000

410,000

Stock options issued during the year

-

600,000

Stock options expired

-

-

Stock options exercised

-

-

Unexercised options, end of year

1,010,000

1,010,000

The following table summarizes information about the stock options as of March 31, 2012:

Outstanding Options

Wtd. Avg.

Range of

Remaining

Wtd. Avg.

Aggregate

Exercise

Contractual

Exercise

Intrinsic

Prices

Shares

Life (years)

Price

Value

$ 0.40

410,000

0.46

$ 0.40

$ 164,000

$ 0.75

600,000

3.88

0.30

180,000

1,010,000

2.17

$ 0.34

$ 344,000

The following table summarizes information about the exercisable stock options as of March 31, 2012:

Exercisable Options

Wtd. Avg.

Remaining

Wtd. Avg.

Aggregate

Contractual

Exercise

Intrinsic

Shares

Life (years)

Price

Value

341,667

0.46

$ 0 .40

$ 136,667

134,400

3.88

0.30

40,320

476,067

2.17

$ 0.34

$ 176,987

The following table summarizes information about non-vested options as of the year ended March 31, 2012:

Wtd. Avg.

Grant Date

Options

Fair Value

Non-vested at March 31, 2011

726,667

$ 0.34

Stock options issued during the year

-

-

Vested during the year ended March 31, 2011

(192,734)

0.40

Non-vested at March 31, 2012

533,933

$ 0.34

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Line of Credit

The Company has a $400,000 revolving credit line with a local banking institution that it uses from time to time to satisfy short-term fluctuations in cash flows. At March 31, 2012 and 2011 the Company had $-0- outstanding on the line of credit.

F-12

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2012 and 2011

NOTE 8 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Operating Lease

On February 12, 2012 the Company entered into a lease for office space in Houston, Texas. The lease term extends through January 31, 2014 at $1,463 per month. Future lease obligations are as follows:

2013

$

17,550

2014

14,625

Total

$

32,175

NOTE 9 – SUBSEQUENT EVENTS

In accordance with ASC 855, management evaluated the subsequent events through the date the financial statements were issued and has no material events to report.

F-13

EXHIBIT INDEX

Exhibit No.

Exhibit Description

21.1

Subsidiaries

31.1

Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a)

31.2

Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a)

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